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Pigs at the Trough: How Corporate Greed and Political Corruption Are Undermining America
by Arianna Huffington
Click here to buy the book

THE BLOODLESS COUP
The Corporate Takeover of Our Democracy

“There can be no effective control of corporations while their political activity remains. To put an end to it will be neither a short nor an easy task.”-- Theodore Roosevelt (August 31, 1910)

“The men may be the head of the house,” says Lainie Kazan in an oft-quoted line from My Big Fat Greek Wedding, “but the women are the neck and they can turn the head any way they want.” In the same way, our political leaders may be the head of the country, but the greedy horde of special interests is the neck that turns our politicians’ gaze this way and that—including away from corporate abuses. Oh sure, official Washington thumped its chest loudly after the WorldCom story exploded and hastily passed a corporate responsibility bill it had labored for months to scuttle. But the web of corruption is far too tightly woven to be unraveled with the few modest reform measures put in place so far.

The financial scandals of our time were made possible by an unprecedented collusion between corporate interests and politicians that, despite all the breast-beating about reform, is still going strong. Together, these two powerful groups tore down hard-won regulations that restrained the worst capitalist excesses, leaving in their place a shaky edifice of feckless self-policing and cowed regulators, powerless to prevent the corporate Chernobyls.

Because corporations are such generous campaign donors and such demanding patrons, they have been coddled and cuddled and humored by lawmakers until little remained of a regulatory regime dating back to the last great era of capitalism run amok, the 1920s. Like teenagers insisting they are mature enough to look after themselves, the corporate pigs whined furiously about laws and regulations they viewed as onerous—laws and regulations we had already learned the hard way were essential to control the forces of greed. But they didn’t just whine, they put their money—and their considerable political muscle—where their mouths were.

Once corporate America got the keys to the car, Mom’s credit card, and the free run of the house, it threw a drunken pool party the likes of which even Hugh Hefner has never seen. With government regulators forced to butt out, a wave of what Kevin Phillips, author of Wealth and Democracy, calls “financialization” swept the economy. “The processes of money movement, securities management, corporate reorganization, securitization of assets, derivatives trading, and other forms of financial packaging are steadily replacing the act of making, growing, and transporting things,” Phillips wrote. In this financialization fun house, real profits aren’t necessary; you can simply make them up. Financial shenanigans are so much easier than actually making a company work.

Corporations get their way in Washington by traveling a long-established highway of corruption—with well-stocked gift shops at every exit. Lobbying in America has become a $1.55 billion business. There are 38 lobbyists for each and every member of Congress. Lobbyists from just one industry alone, the hyperactive pharmaceutical business, outnumber actual members of Congress by 623 to 535. Get those guys a dose of Ritalin.

This is the nexus of corporate corruption; the source of all the swill. The unseemly link between money and political influence is the dark side of capitalism. It was this link that prompted a full-court-press by key members of Congress against crucial reforms proposed by ex-SEC chairman Arthur Levitt in the nineties, reforms that might have prevented some of the bloodletting of the last year.

It was also this link that gave Enron and Kenneth Lay their aura of power, and made Lay a principal shaper of the administration’s energy policy and an intimate FOG (Friend Of George). This aura didn’t come cheap. Enron and its executives doled out $2.4 million to federal candidates in the 2000 election and were among George W’s biggest donors. Lay and his wife alone have donated $793,110 to the GOP since W’s dad was in office. Enron has also spent big bucks lobbying Congress and the White House: $4 million in 1999 and 2000 alone. The money had bought the company a bipartisan who’s who of Washington insiders—including James Baker, Mack McLarty and Gore 2000 fundraising director Johnny Hayes—to help push its corporate agenda.

In exchange for his unwavering support, “Kenny Boy” was given unprecedented input into the makeup of the Federal Energy Regulatory Commission (FERC), the agency charged with regulating Enron’s core business. Lay bragged to one potential nominee about his “friends at the White House.” He also personally put the screws to FERC chair Curtis Hebert in an effort to change his views on electricity deregulation. Hebert didn’t oblige, and was soon the former chairman of FERC, replaced by Enron ally Pat Wood. Wood actually insisted that the collapse of Enron “doesn’t seem to be tied too much to deregulated energy markets.” You know that something is rotten in Washington when the top energy industry regulator is so unabashedly anti-regulation.

We also now know why the White House was willing to go to court to fend off congressional efforts to find out who Vice President Cheney met with for input on his Energy Task Force. Turns out the VP and his staff had at least six meetings with representatives from Enron—including two with Chairman Lay himself—the last of which occurred just six days before the company revealed that it had vastly overstated its earnings, signaling the beginning of the end for the energy giant.

The Morally Bankrupt Bankruptcy Act

The link between money and policy is also all too evident in the Bankruptcy Reform Act—yet another glaring case of legislation crafted specifically for business interests at the expense of the public. Faced with scrambled nest eggs, sinking pension plans, shaky health coverage, and a gloomy job market, millions of average Americans are taking it on the chin—and in the wallet. Indeed, one out of every sixty-nine U.S. households filed for personal bankruptcy in the year ending March 2002.

And it’s important to note that only 3% of these filings are by people who abuse the system by living extravagant lifestyles and then leaving their creditors holding the bag. The majority are actually low- to middle-class people who can’t pay their bills because they’ve lost their jobs or been hit with crippling medical expenses or been enticed into running up unmanageable credit card balances by easy-credit come-ons and here-today-gone-tomorrow “teaser” interest rates.

The Bankruptcy Act would make it much harder for average Americans to start afresh after they declare bankruptcy, while, not coincidentally, adding billions of dollars to the bottom line of banks and credit card companies.

Why, then, were our elected representatives so eager to pass the legislation? Perhaps it has something to do with the $28 million the finance and credit industries have contributed to political campaigns since 1990—including over $4 million in the 2002 election cycle. Credit card giant MBNA, a major proponent of tougher bankruptcy standards, was the top individual contributor to President Bush’s 2000 campaign—while two other big credit card issuers, Citigroup and Morgan Stanley, were among his top-10 donors.

For an especially sleazy example of how this Beltway quid pro quo works, look no further than the case of Representative Jim Moran, the chief Democratic sponsor of the bankruptcy bill and, not coincidentally, the founder and co-chair of the New Democratic Coalition—the corporate money wing of the party dedicated to bringing Democrats more in thrall to big business. It seems that back in 1998, Moran was on the verge of being buried under an avalanche of hefty credit card balances he couldn’t pay off. Things looked grim for the Congressman—until he was bailed out by a sweetheart loan orchestrated by the folks at MBNA. The same folks later claimed that they had offered the loan to Moran not realizing that he was a member of Congress and that he might be involved in the bankruptcy bill. Instead, a spokesman said the loan “made good business sense.”

It sure did, because, in a move as shameless as it is despicable, Moran then turned around and helped craft a bill that will pay back his loan to MBNA many times over—and make it harder for average consumers who find themselves in the same jam he was in to get out of debt. Do you think MBNA will ride to their rescue as well? Or will it do everything in its newly fortified power to exact its pound of flesh?

It is particularly ironic that Congress was wrapping up its billion-dollar gift to the banking industry during the same week executives of Citigroup and J.P. Morgan Chase were lambasted on Capitol Hill for helping Enron defraud shareholders to the tune of $8 billion. Only in Washington could a pair of companies be publicly raked over the coals—branded as bald-faced liars and criminal accessories—on a Tuesday and then blown an all-is-forgiven make-up smooch on Thursday.

So once again big donors get a kiss on the lips and little guys get a kick in the rear. And those trying to dig themselves out of a mountain of debt are not likely to be given a boost by a contracting job market with more people seeking unemployment benefits than at any time in nearly 20 years.

ALL IN THE FAMILY
Everywhere there’s lots of piggies,

Living piggy lives.—“Piggies,” The Beatles

Lobbyist

Relationship

Politician

Position in 107th Congress

Chet Lott

Son

Sen. Trent Lott
(R-Miss.)

Senate Minority
Leader

Linda Daschle

Wife

Sen. Tom Daschle (D-S. Dak.)

Senate Majority Leader

Joshua Hastert

Son

Rep. Dennis Hastert
(R-Ill.)

Speaker of the House

Scott Hatch

Son

Sen. Orrin Hatch (R-Utah)

Ranking Member, Judiciary Committee

Phyllis Landrieu

Aunt

Sen. Mary Landrieu (D-La.)

Appropriations Committee

John Breaux, Jr.

Son

Sen. John Breaux (D-La.)

Chief Deputy Whip

Key Reid

Son

Sen. Harry Reid (D-Nev.)

Majority Whip

Anne Bingaman

Wife

Sen. Jeff Bingaman (D-N. Mex.)

Chairman, Energy and Natural Resources Committee

 

Pigs at the Trough: How Corporate Greed and Political Corruption Are Undermining America
by Arianna Huffington
Click here to buy the book

9/11: When the Pigs Turned into Vultures

No lobbying campaign in history reveals the depths of the corruption of corporate America as hauntingly as the one that followed September 11.

The speed with which corporate America reacted to the glimmer of future profits in the smoldering aftermath of the national crisis was simply atrocious. Before the fires were even out in New York, the lobbyists had swooped down on Capitol Hill to make sure they got their piece of the overstuffed pie they were certain would be served up.

It is now painfully clear that our leaders—both in the current administration and its predecessor—knew that a terrorist attack on American soil would almost surely happen at some point. So, why didn’t they do more to protect us? Could it be because the public interest didn’t have a gaggle of lobbyists patrolling Congress and the White House offering cash incentives to protect the American people from fanatics and madmen?

If counterterrorism had been an industry doling out large contributions, our political leaders would surely have leapt into action—pushing through legislation to ensure our airports were secure and our intelligence operations were actually collecting intelligence. Instead, the attacks exposed not only how vulnerable our airports are but how vulnerable our system of government is when policy priorities are determined not in response to the public interest but in response to the best-funded interest groups.

In the absence of a flush lobbying organization representing the public good, Congress began its 107th session by tuning its fiddle for the burning of Rome with deeply essential matters like the bankruptcy reform bill. Making its friends in the banking industry happy was clearly a higher priority than homeland security.

Indeed, the nexus of corruption was one of the few aspects of American life not shaken to its foundation by the events of 9/11. The airline industry, for instance, didn’t miss a beat in dispatching its lobbyists to take advantage of the national trauma. In deep financial trouble long before the attacks, the airlines were nevertheless able to wrangle a gargantuan $15 billion bailout package from Congress—secured by an army of lobbyists including Linda Daschle. So the $50 million a year the airline industry spends on lobbying, and the $6.8 million it contributed to both parties last election, turned out to be pretty smart investments. As for the actual economic victims of the attacks, the billions did nothing to shield airline workers from massive post-bailout layoffs: 30,000 at Boeing, 27,000 at American Airlines, 20,000 at United, 12,000 at Continental, and 11,000 at US Airways. Nor did they stop US Airways from declaring bankruptcy.

The pharmaceutical industry was equally eager to mine our national suffering for nuggets of gold. Of course, to hear the drug companies tell it, they were as patriotic as Patrick Henry, as generous as Andrew Carnegie, and as selfless as Mother Teresa. Which would be true if Patrick Henry had proclaimed, “Give me liberty or give me profits,” Mother Teresa had enlisted Calcutta’s lepers as lobbyists, and Andrew Carnegie had spent millions on self-aggrandizing full-page ads.

In a slew of high-level meetings in October and November of 2001 with the likes of homeland security czar Tom Ridge, HHS Secretary Tommy Thompson, and even the president himself, the pharmaceutical industry’s chief executives eagerly exploited the panic surrounding the anthrax attacks to make their lifelong legislative dreams come true: lower drug approval standards, less oversight, less regulation and immunity from lawsuits.

This rancid lobbying campaign was sweetened with the cherry-flavored rhetoric of munificent patriotism. The comments of Alan Holmer, the head of PhRMA, a drug industry lobbying group, were particularly Orwellian. “This is not about profits. It is not about patents,” he said of efforts to boosts profits by enhancing patents. “It is about making sure we have an adequate supply of medicines available to the American people.”

In those dark days, as the country dreaded the delivery of the next suspicious envelope, Peter Dolan, chief executive of Bristol-Meyers, proudly claimed: “We are part of the nation’s defense system. As an industry, there is a real opportunity for us to give our resources in a time of great need.” Mr. Dolan must have been using a different dictionary, because mine defines “giving” as “making a present of”—not “figuring out a way to make a ton of money while taking advantage of the nation’s bioterrorism fears.”

Which is exactly what the industry did. Who remembers the headline-grabbing deal that Bayer cut with HHS Secretary Thompson to provide Cipro to the government at the special price of 95 cents a pill, marked down from its previous special price of $1.77? It sounded good—until it came out that it costs Bayer about 20 cents to make a Cipro tablet. The company would still be making hundreds of millions of dollars off the anthrax attacks—to say nothing of the priceless free publicity the rush on Cipro brought. “There will be so much trust,” predicted Bayer CEO Helge Wehmeier at the time. “We’ll benefit greatly from this.” I’m sure America’s anthrax victims—the ones still alive, at least—were very happy to hear that.

As if this jagged little pill wasn’t hard enough to swallow, it turned out the Federal Trade Commission was investigating charges that Bayer conspired to keep a low-cost generic version of Cipro off the market by illegally paying three of its competitors a total of $200 million.

Think of that: at the very moment the public was freaking out about whether there was going to be enough of the life-saving drug available, Bayer was actually paying other companies hundreds of millions of dollars not to produce it. And the fact that the company just happened to have a spare $200 million sitting around for corporate payola proves how insanely lucrative the drug business is.

Joining the shameless mob of business interests smelling blood in the water after 9/11 was Big Steel. Wrapping themselves in the flag, steel industry lobbyists descended on Washington in search of new tariffs on imported steel. They insisted that the controversial levies were a matter of national security.

Senator Rick Santorum, the Pennsylvania Republican, who is a major recipient of Big Steel donations, said after the attacks: “This is an industry with significant national security implications. It’s important from the whole basic concept of maintaining manufacturing in this country. It’s important to have a vibrant domestic source of steel.” Notice the emotional appeal to some vague “basic concept.” Like agribusiness, steelmakers like to tap into America’s image of itself as a country that makes stuff and grows things, even though the less manly service sector actually constitutes 80% of our nation’s economy.

Of course, President Bush was calling steel “a national security issue” even before the War on Terror. Proving himself a true Man of Steel, in August 2001, having already ordered a review of steel policy, he ranted and raved to an appreciative crowd of steelworkers in Pittsburgh, demanding that foreign producers cut their own exports, and repeating the national security canard.

In truth, this national security argument is red, white, and blue rubbish. Calling it “absolute baloney,” Robert Crandall, a steel expert at the Brookings Institution, says that one or two mills could provide all the steel needed for national defense in any conceivable emergency.

While all these special interests reacted to 9/11 with an outstretched hand, the food industry responded with a closed mind. Its lobbyists—including trade groups like the National Food Processors Association, the Food Marketing Institute, and the American Frozen Food Institute—fought a guerilla campaign to stall the Public Health Security and Bioterrorism Bill, which included increased inspections of imported food, a requirement for food manufacturers to register with the government and authorizing the FDA to seize suspect food without having to obtain a court order.

But as bald-faced as each of these groups was in its post-9/11 special pleading, our political leaders outdid them.

Far from it disrupting their normal run of unabashed corporate toadying, the war on terrorism enhanced it. Indeed, it gave our leaders cover to put forward their favorite answer to many a problem America faces: a massive corporate giveaway. And they even had the gall to call it patriotism. Others, using the English language more rigorously, called it war profiteering.

The so-called economic stimulus package that passed the House just over a month after September 11 would have been scurrilous in times of prosperity. But in a time of national calamity it was, quite simply, grotesque.

The stimulus package was little more than a rehashed corporate wish list, doling out $115 billion in tax breaks to big business and the wealthiest taxpayers, and a comparatively measly $14 billion to poor and moderate-income families in the form of tax rebates and unemployment benefits. And while the tax cuts for the haves were permanent, those for the have-nots were good for only one year.

What’s more, the money given to corporate America was given without conditions—not tax credits tied to investments, but handouts more likely to end up in CEOs’ compensation packages than back in the economy.

All you really needed to know about the true nature of the economic stimulus package could be found in a largely unnoticed provision that made permanent a gaping tax loophole that was about to expire. It allowed multinational corporations such as GE and Ford to preserve forever a key weapon in the corporate tax dodger’s armory: the freedom to shift profits overseas. Tell me, how exactly is providing incentives to keep money out of our economy supposed to stimulate our economy?

The House bill was so outrageous that even some top GOP officials balked. In a rare slip from the party line, Treasury Secretary Paul O’Neill colorfully criticized it as “show business.” Representative Greg Ganske (R-Iowa), one of seven Republicans who voted against the bill, labeled it “an early Christmas card” for “already profitable corporations.” And the president’s ornery budget director, Mitch Daniels, informed the nation in a poetic outburst that “the corral gates” have been blown open and “the animals are running loose.” The galloping beasts in this case were corporate lobbyists and their chums on the Hill.

The juiciest goody in this box of corporate bonbons was a retroactive repeal of the corporate alternative minimum tax, a treat that would lead to $25 billion in instant corporate rebate checks to needy companies such as IBM (slated to get $1.4 billion), GM ($833 million), and GE ($671 million).

Of the $25 billion refund, over $6.3 billion was earmarked for just 14 corporations. Predictably, these 14 lucky winners were regular and generous political donors. Over the last 10 years, they’ve poured almost $15 million in soft money into the national committees of both parties. And, as always, investments made in politicians are never wasted.

Such a blatant quid pro quo is so indefensible that even the main champions of the stimulus package—the grandly named Economic Security and Recovery Act—didn’t try very hard to justify it. Take Representative Dick Armey’s wan effort on Meet the Press. There he was, half-heartedly trying to convince Tim Russert that we needed these massive tax cuts because the last round of massive tax cuts were not geared to stimulating the economy. Really? Wasn’t that him at a House subcommittee hearing a few months earlier, selling the last tax cut bill as “just the shot in the arm that this economy needs”? But if something isn’t working, why try more of it?

Armey then treated Russert and the rest of us to a lecture on how big corporate giveaways are the best way to create new jobs. Unfortunately, the facts don’t bear him out. The $15 billion Congress handed the airline industry didn’t keep it from laying off over 150,000 workers. Armey went on to promise that the new stimulus package “will create 170,000 new jobs next year alone.” At the time of Armey’s hopeful pronouncement 7.8 million were unemployed in the country; by fall 2002 that figure had risen to more than 8 million.

So let history record that, after September 11, our leaders brought the nation together and decided to fight the war on terrorism by making business lunches fully tax-deductible, offering billions to panhandling American businesses, and levying no taxes on corporate profits patriotically funneled offshore. Call it Operation Enduring Avarice. It’s enough to put a lump in your throat.

Washington’s consistent siding with the wealthy and the influential over the public has led to a fundamental breakdown of our democracy. What follows is a closer look at four stunning examples: corporate America’s fight to end environmental protections and the craven corporate gluttony of the pharmaceutical, steel, and farming industries.

KEEP AWAY FROM CHILDREN . . . AND ADULTS

Both the number and the rate of product recalls have been rising steadily. According to the Consumer Product Safety Commission, which has jurisdiction over more than 15,000 types of products, there were more recalls in 2001—344—than in most years during the previous decade. The Agriculture Department, which regulates foodstuffs, and the National Highway Traffic Safety Administration, which does the same for vehicles and associated products, also report sharply rising numbers of recalls. In a single week in the spring of 2002, 919,000 child car seats; 124,000 children’s soap-making kits; 23,000 pounds of turkey meat; 14,000 bottles of a nutritional supplement; and 7,500 exercise machines were recalled for being unsafe.

Johnson & Johnson

Stopped selling its heartburn drug Propulsid in March 2000 after it had been connected with 80 deaths.

Wyeth

Pulled painkiller Duract off shelves after it was linked to liver-related deaths.

Despite a 2002 study revealing that women using Prempro, Wyeth’s highly profitable hormone replacement drug, displayed an increased risk of breast cancer, heart attacks, strokes, and blood clots, the company continues to market the drug.

Bayer

In August 2001, Bayer withdrew its popular—and highly profitable—cholesterol drug Baycol from the market. Over a hundred deaths have been linked to the drug.

Schering-Plough

Alleged to have produced asthma inhalers that didn’t contain asthma-fighting medication—an omission linked to 17 deaths, including that of a 10-year-old boy.

ConAgra

Recalled nearly 19 million pounds of ground beef in July 2002 contaminated with the E.coli bacteria. The tainted meat has been connected with 47 cases of illness in 14 states, and one death in Ohio.

Pacific Gas & Electric

Starting in the 1950s, PG&E dumped carcinogen-laced water into unlined ponds, from where it was able to seep into Hinkley, California’s water supply. Residents of the town were not told about the contamination until the late 1980s. In 1996 PG&E made a $333 million settlement with them and the story later became Erin Brockovich. Since then a broader case has been filed against PG&E in other towns, and fifty people have died, lawyers allege, from cancer, kidney and liver diseases and respiratory problems.

Graco

Recalled nearly one million child car seats because metal hooks and bars that link the seat to the base may be missing and could fail in a crash or sudden stop. The recall occurred weeks after Graco removed the seat from stores without informing consumers of the problem.

Tyco

35 million indoor fire sprinklers were recalled because they may not work in an actual fire.

Kmart

Recalled about 24,000 Martha Stewart Everyday brand tea kettles because boiling water could be expelled from the spout.

Honeywell

In October 2001, Honeywell agreed to pay a civil penalty of $800,000 to settle allegations that Duracraft Corp.—which Honeywell purchased in 1996—failed to report problems with a number of its products to the Consumer Product Safety Commission in a timely manner.

Roche Pharmaceuticals

Although Roche warns that Accutane can cause serious birth defects, between 1982 (the year Accutane hit the market) and 2000 nearly 2,000 women became pregnant while using the drug. Most of those pregnancies ended in abortion, but of the 383 babies born, nearly half had birth defects.

Bridgestone

The company pulled 6.5 million Firestone tires in 2000 after road safety authorities linked the tires to 271 deaths and over 750 injuries.

American Home Products

American Home Products finally settled a $3.75 billion lawsuit in January 2002 to resolve claims that its wildly popular obesity drug combination, Fen-Phen, was connected to heart-valve disease. Over 6 million people took the drug before it was withdrawn from the market. The FDA has linked Fen-Phen and Redux, another diet drug made by the company, to over 300 deaths.

Daisy Manufacturing

In October 2001 the Consumer Product Safety Commission filed a lawsuit against Daisy in an attempt to compel the company to inform consumers that two of its airgun lines are defective and pose considerable risk of injury or even death. Daisy has refused to voluntarily recall these guns.

PHONY GRASSROOTS CAMPAIGN

One of the most useful tools in the lobbyist’s bag of dirty tricks is the phony grassroots campaign. It works like this:

Step 1: Take out alarming full-page ads in national newspapers that enrage people by wildly exaggerating the effects of some legislation pending before Congress: “The Federal Government is trying to steal your car!!!”

Step 2: Include a list of phone numbers of congressmen or, better yet, a single toll-free number that ordinary citizens can call to express their opinion on the issue at hand. “Call your congressman immediately and tell him/her it’s un-American for the government to steal your car, and he or she should vote against HR 1342 because it’s a slippery slope. Next, they’ll be stealing our babies!”

Step 3: Include a sneaky little clip-and-mail coupon at the bottom that can be sent to your congressman’s office.

So, let’s turn the tables on these grassroots harvesters and send the coupon below to your representative, senator, governor, or the president. A comprehensive list of their names and addresses can be found at www.congress.org.

Dear Representative/Senator/Governor/President/Other _____,

As a concerned citizen of (your town and state), I am writing you to ask that you refrain from making important decisions based on phony write-in campaigns like this one. Please determine your positions using the best available information, the advice of impartial experts, and, most of all, your own conscience. Please ignore suspicious deluges of mail or phone calls which are often solicited dishonestly by lobbying firms.

Thank you in advance. God bless America (optional),

(Your name)

Excerpted from Pigs at the Trough by Arianna Huffington Copyright © 2003 by Arianna Huffington. Excerpted by permission of Crown, a division of Random House, Inc. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Click here to buy the book


 
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